How your claims history affects your car insurance premium

This article has been updated from a previous version.

Many factors determine your auto insurance premium. Just as your driving record is a predictor of what claims you may end up making, your claims history has a great deal of impact on how much your auto insurance costs.

Your claims history gives your insurance provider a hint at what to expect from you as a driver in the future — the good, the bad, and the ugly.  

Regardless of their nature, claims cost your insurance company money, which is why it will consider your claims history when quoting you for a new policy or renewing your existing one.

Insurance companies must bring in more money than they spend on customers’ claims. If you’ve made a lot of claims as an insured driver, it’s a sign that you could be a money-losing customer, even if you don’t realize it.

Not all auto insurance claims are created equal

Depending on how long you’ve been a licensed driver, you may not even be able to recall your claims history. Although you don’t need to know, it can help when shopping around for car insurance — understanding your claims history will help you avoid sticker shock.

The nature of the claim matters, so if you were involved in a collision and made a claim, you should verify the accuracy of the collision report. Although rare, it’s possible a report may incorrectly state you were at fault, or the report may be tagged as open when it has in fact been closed. Both situations could potentially drive up your premium.

If you've been in one or more collisions, it's important to track the details and dates. Insurance companies consider how recently you've had a collision or filed a claim when calculating your premium.

The time since your last claim—whether two years or a decade—plays a role. A clean driving record over time can lower your rates, rewarding you for being a safer driver.

Whether you're switching insurers or staying put, a history of fewer claims can lead to lower premiums. Over time, safe driving and claim-free years should result in reduced rates.

Related: Your car may be worth less after an accident: Learn about diminished value

Claim details matter

Insurance companies consider which people are making the costliest claims, as well as whether a driver’s claim was accepted, denied or withdrawn.  

Ultimately, the details of the collision can dictate how a claim affects your monthly premium, including who is at fault for the collision, your driving record, and the amount of the claim. 

Your rate may remain the same if the collision isn’t your fault.  

If you are found at fault, a good driving record and a long gap since your last claim could minimize or prevent a premium increase. Even if the claim does warrant a rate hike, it’s likely your premium won’t go up until your policy is renewed.  

Most claims stay on your driving record for three years, so that’s how long you can expect to see any hikes affecting your insurance rate.

Similarly, the insurance company has access to recent events from your driving history over the same three-year period. In addition to any claims, they can access a record of tickets, collisions, convictions, and any driving courses.

Read more: When won’t an at-fault collision impact your car insurance rate? 

How to find affordable car insurance rates — even with a claims history

If you do make a claim that raises your rate, taking additional driver’s education or safety courses can help bring your premium down again. This shows your insurance company that precautions are taken that will help reduce your likelihood of being involved in another collision and making a claim.

Another way to reduce your rate is by avoiding making claims for minor incidents. For example, if you got dinged in a shopping mall parking lot while parked, it might be better to pay for the repairs out of pocket.  

However, some factors affecting your premium are beyond your control. Rising costs due to inflation, tariffs, and climate change-related events (like severe weather causing more accidents and claims) can drive up insurance rates.

If you’re wondering why your premium is jumping on renewal with your existing insurance company or what impacts your auto insurance rate when you go looking for a new provider, always remember that your claims history is in the driver’s seat with you.  

It never hurts to shop around, especially if you have an overall good driving record, and no history of major insurance claims. The company that offered you the best rate last year won’t necessarily be the same each year, which is why it’s in your best interest to compare quotes from a variety of providers.

Read next: The best (and cheapest) cars to insure in Canada